- This topic has 160 replies, 16 voices, and was last updated 16 years ago by ltokuda.
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April 23, 2008 at 9:00 AM #193208April 23, 2008 at 1:54 PM #193338SandraLParticipant
As in all things, there are usually several factors at work. I would add to the pile that higher-end buyers tend to be financially more savvy than first time buyers. I know that to be true in my case. There are so many things you don’t know when you buy your first home and you can read every book out there and still not *get* it. With experience, comes a certain amount of wisdom. I would speculate that anyone who’s worked their way up to a home in a high end area is probably on at least their second time purchase, if not third or fourth. They have likely made smarter loan choices, known what fine print to pay attention to, and had less need to refinance their way to poverty. In short – they are less likely to be living beyond their means and making poor financial choices. That doesn’t mean there won’t be a some headed to foreclosureville, just fewer than in neighborhoods full of starter homes.
April 23, 2008 at 1:54 PM #193367SandraLParticipantAs in all things, there are usually several factors at work. I would add to the pile that higher-end buyers tend to be financially more savvy than first time buyers. I know that to be true in my case. There are so many things you don’t know when you buy your first home and you can read every book out there and still not *get* it. With experience, comes a certain amount of wisdom. I would speculate that anyone who’s worked their way up to a home in a high end area is probably on at least their second time purchase, if not third or fourth. They have likely made smarter loan choices, known what fine print to pay attention to, and had less need to refinance their way to poverty. In short – they are less likely to be living beyond their means and making poor financial choices. That doesn’t mean there won’t be a some headed to foreclosureville, just fewer than in neighborhoods full of starter homes.
April 23, 2008 at 1:54 PM #193394SandraLParticipantAs in all things, there are usually several factors at work. I would add to the pile that higher-end buyers tend to be financially more savvy than first time buyers. I know that to be true in my case. There are so many things you don’t know when you buy your first home and you can read every book out there and still not *get* it. With experience, comes a certain amount of wisdom. I would speculate that anyone who’s worked their way up to a home in a high end area is probably on at least their second time purchase, if not third or fourth. They have likely made smarter loan choices, known what fine print to pay attention to, and had less need to refinance their way to poverty. In short – they are less likely to be living beyond their means and making poor financial choices. That doesn’t mean there won’t be a some headed to foreclosureville, just fewer than in neighborhoods full of starter homes.
April 23, 2008 at 1:54 PM #193411SandraLParticipantAs in all things, there are usually several factors at work. I would add to the pile that higher-end buyers tend to be financially more savvy than first time buyers. I know that to be true in my case. There are so many things you don’t know when you buy your first home and you can read every book out there and still not *get* it. With experience, comes a certain amount of wisdom. I would speculate that anyone who’s worked their way up to a home in a high end area is probably on at least their second time purchase, if not third or fourth. They have likely made smarter loan choices, known what fine print to pay attention to, and had less need to refinance their way to poverty. In short – they are less likely to be living beyond their means and making poor financial choices. That doesn’t mean there won’t be a some headed to foreclosureville, just fewer than in neighborhoods full of starter homes.
April 23, 2008 at 1:54 PM #193455SandraLParticipantAs in all things, there are usually several factors at work. I would add to the pile that higher-end buyers tend to be financially more savvy than first time buyers. I know that to be true in my case. There are so many things you don’t know when you buy your first home and you can read every book out there and still not *get* it. With experience, comes a certain amount of wisdom. I would speculate that anyone who’s worked their way up to a home in a high end area is probably on at least their second time purchase, if not third or fourth. They have likely made smarter loan choices, known what fine print to pay attention to, and had less need to refinance their way to poverty. In short – they are less likely to be living beyond their means and making poor financial choices. That doesn’t mean there won’t be a some headed to foreclosureville, just fewer than in neighborhoods full of starter homes.
April 23, 2008 at 5:51 PM #193464ltokudaParticipantIt is not that I do not agree with the plankton theory because I do. However, that would suggest that at some point in the future we will exhaust the number of buyers correct?
I don't think the theory says you'll eventually run out of buyers. We're not talking about the extinction of the plankton population. We're just talking about a crash in the plankton population. This would be analogous to a crash in starter home values. Even in the worst of times, people will buy starter homes and people will sell starter homes. There's always going to be some population of plankton around. But the size of that population affects everyone up the food chain.
However to get a good idea of when that will be we have to know how many buyers are move up buyers, and how many are still out there waiting to buy with move up money. To me it is a very plausible theory that makes sense, however, it is also kind of open ended as to when and how long the plankton theory will seriously thin out the buyers pools in these other desireable areas. Not saying it cannot or will not… I just tend to think like everything else, it will vary on a per area in timing and amplitude so to speak…
Yeah, I agree with this. The theory doesn't tell you exactly when the high end areas will fall. But I think if you keep an eye on the surrounding markets, you can get a pretty good idea. If you see the $500k homes start to crash … then the $1M homes crashes later … then the $1.5M homes crashes after that … If you believe the plankton theory, then you would predict that the $2M homes are next in line. The theory can't give you the exact timing, but it can tell you the order in which different markets will move. That information in itself can be very useful.
April 23, 2008 at 5:51 PM #193492ltokudaParticipantIt is not that I do not agree with the plankton theory because I do. However, that would suggest that at some point in the future we will exhaust the number of buyers correct?
I don't think the theory says you'll eventually run out of buyers. We're not talking about the extinction of the plankton population. We're just talking about a crash in the plankton population. This would be analogous to a crash in starter home values. Even in the worst of times, people will buy starter homes and people will sell starter homes. There's always going to be some population of plankton around. But the size of that population affects everyone up the food chain.
However to get a good idea of when that will be we have to know how many buyers are move up buyers, and how many are still out there waiting to buy with move up money. To me it is a very plausible theory that makes sense, however, it is also kind of open ended as to when and how long the plankton theory will seriously thin out the buyers pools in these other desireable areas. Not saying it cannot or will not… I just tend to think like everything else, it will vary on a per area in timing and amplitude so to speak…
Yeah, I agree with this. The theory doesn't tell you exactly when the high end areas will fall. But I think if you keep an eye on the surrounding markets, you can get a pretty good idea. If you see the $500k homes start to crash … then the $1M homes crashes later … then the $1.5M homes crashes after that … If you believe the plankton theory, then you would predict that the $2M homes are next in line. The theory can't give you the exact timing, but it can tell you the order in which different markets will move. That information in itself can be very useful.
April 23, 2008 at 5:51 PM #193521ltokudaParticipantIt is not that I do not agree with the plankton theory because I do. However, that would suggest that at some point in the future we will exhaust the number of buyers correct?
I don't think the theory says you'll eventually run out of buyers. We're not talking about the extinction of the plankton population. We're just talking about a crash in the plankton population. This would be analogous to a crash in starter home values. Even in the worst of times, people will buy starter homes and people will sell starter homes. There's always going to be some population of plankton around. But the size of that population affects everyone up the food chain.
However to get a good idea of when that will be we have to know how many buyers are move up buyers, and how many are still out there waiting to buy with move up money. To me it is a very plausible theory that makes sense, however, it is also kind of open ended as to when and how long the plankton theory will seriously thin out the buyers pools in these other desireable areas. Not saying it cannot or will not… I just tend to think like everything else, it will vary on a per area in timing and amplitude so to speak…
Yeah, I agree with this. The theory doesn't tell you exactly when the high end areas will fall. But I think if you keep an eye on the surrounding markets, you can get a pretty good idea. If you see the $500k homes start to crash … then the $1M homes crashes later … then the $1.5M homes crashes after that … If you believe the plankton theory, then you would predict that the $2M homes are next in line. The theory can't give you the exact timing, but it can tell you the order in which different markets will move. That information in itself can be very useful.
April 23, 2008 at 5:51 PM #193536ltokudaParticipantIt is not that I do not agree with the plankton theory because I do. However, that would suggest that at some point in the future we will exhaust the number of buyers correct?
I don't think the theory says you'll eventually run out of buyers. We're not talking about the extinction of the plankton population. We're just talking about a crash in the plankton population. This would be analogous to a crash in starter home values. Even in the worst of times, people will buy starter homes and people will sell starter homes. There's always going to be some population of plankton around. But the size of that population affects everyone up the food chain.
However to get a good idea of when that will be we have to know how many buyers are move up buyers, and how many are still out there waiting to buy with move up money. To me it is a very plausible theory that makes sense, however, it is also kind of open ended as to when and how long the plankton theory will seriously thin out the buyers pools in these other desireable areas. Not saying it cannot or will not… I just tend to think like everything else, it will vary on a per area in timing and amplitude so to speak…
Yeah, I agree with this. The theory doesn't tell you exactly when the high end areas will fall. But I think if you keep an eye on the surrounding markets, you can get a pretty good idea. If you see the $500k homes start to crash … then the $1M homes crashes later … then the $1.5M homes crashes after that … If you believe the plankton theory, then you would predict that the $2M homes are next in line. The theory can't give you the exact timing, but it can tell you the order in which different markets will move. That information in itself can be very useful.
April 23, 2008 at 5:51 PM #193580ltokudaParticipantIt is not that I do not agree with the plankton theory because I do. However, that would suggest that at some point in the future we will exhaust the number of buyers correct?
I don't think the theory says you'll eventually run out of buyers. We're not talking about the extinction of the plankton population. We're just talking about a crash in the plankton population. This would be analogous to a crash in starter home values. Even in the worst of times, people will buy starter homes and people will sell starter homes. There's always going to be some population of plankton around. But the size of that population affects everyone up the food chain.
However to get a good idea of when that will be we have to know how many buyers are move up buyers, and how many are still out there waiting to buy with move up money. To me it is a very plausible theory that makes sense, however, it is also kind of open ended as to when and how long the plankton theory will seriously thin out the buyers pools in these other desireable areas. Not saying it cannot or will not… I just tend to think like everything else, it will vary on a per area in timing and amplitude so to speak…
Yeah, I agree with this. The theory doesn't tell you exactly when the high end areas will fall. But I think if you keep an eye on the surrounding markets, you can get a pretty good idea. If you see the $500k homes start to crash … then the $1M homes crashes later … then the $1.5M homes crashes after that … If you believe the plankton theory, then you would predict that the $2M homes are next in line. The theory can't give you the exact timing, but it can tell you the order in which different markets will move. That information in itself can be very useful.
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